Stock Purchase Forms

Sponsored Links

PORTAL SOFTWARE, INC.
STOCK PURCHASE AGREEMENT
April 13, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
1. Purchase and Sale of Stock.......................... 1
1.1 Sale and Issuance of Stock..................... 1
1.2 The Closing.................................... 1
2. Representations and Warranties of the Company....... 2
2.1 Organization and Good Standing................. 2
2.2 Authorization.................................. 2
2.3 Valid Issuance of Stock........................ 2
2.4 Litigation..................................... 2
2.5 Properties..................................... 2
2.6 Compliance with Other Documents................ 2
3. Representations and Warranties of the Investor...... 2
3.1 Authorization.................................. 2
3.2 Investigation.................................. 3
3.3 Accredited Investor............................ 3
3.4 Purchase Entirely for Own Account.............. 3
4. Conditions to the Investor's Obligation at Closing.. 3
4.1 Representations and Warranties................. 3
4.2 Securities Laws................................ 3
4.3 Authorizations................................. 3
4.4 Initial Public Offering of Common Stock........ 3
5. Conditions to the Company's Obligations at Closing.. 3
5.1 Representations and Warranties................. 3
5.2 Securities Laws................................ 3
5.3 Authorizations................................. 4
5.4 Initial Public Offering of Common Stock........ 4
5.5 Payment of Purchase Price...................... 4
6. Covenants of the Company and the Investor........... 4
6.1 Agreement Not to Transfer...................... 4
6.2 Market Stand-Off............................... 4
6.3 Notice of Intention to Transfer................ 4
6.4 Voting Agreements.............................. 5
6.5 Registration of Stock.......................... 5
i
<PAGE>
7. Miscellaneous....................................... 5
7.1 Governing Law................................. 5
7.2 Survival; Additional Securities............... 5
7.3 Successors and Assigns........................ 6
7.4 Entire Agreement.............................. 6
7.5 Notices....................................... 6
7.6 Amendments and Waivers........................ 6
7.7 Legal Fees.................................... 6
7.8 Expenses...................................... 6
7.9 Titles and Subtitles.......................... 6
7.10 Counterparts.................................. 6
7.11 Severability.................................. 7
7.12 Confidentiality............................... 7
ii
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 13th day of April
1999, by and between Portal Software, Inc., a California corporation (the
"Company") and Cisco Systems, Inc., a California corporation (the "Investor").
-------- --------
WHEREAS, the Investor has indicated a desire to purchase 3,000,000
shares of Common Stock from the Company.
WHEREAS, the Company has indicated a desire to sell 3,000,000 shares
of Common Stock to the Investor and has agreed to register such shares under the
Securities Act of 1933, as amended (the "Securities Act") on the terms set forth
herein.
WHEREAS, the Company and the Investor have agreed that this Agreement
shall constitute the entire understanding and agreement between the parties with
regard to the subject matter hereof.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
--------------------------
1.1 Sale and Issuance of Stock. Subject to the terms and conditions of
--------------------------
this Agreement, the Company agrees to sell to the Investor and the Investor
agrees to purchase from the Company 3,000,000 shares/1/ of the Company's Common
---
Stock (the "Stock"), having the rights, preferences, privileges and restrictions
-----
set forth in the form of Amended and Restated Certificate of Incorporation of
the Company (the "Restated Certificate") to be filed with the Delaware Secretary
--------------------
of State prior to the Closing (as defined below).
1.2 The Closing. The purchase and sale of the Stock shall be held at
-----------
the Company's offices concurrently with the closing of the Company's initial
public offering (the "IPO") or, if later, upon satisfaction or waiver of each of
the conditions set forth in Sections 4 and 5 (the "Closing"). At the Closing,
-------
the Company will deliver the Stock to the Investor against payment of the
purchase price therefor by check payable to the order of the Company or by wire
transfer. The per share purchase price for the Stock shall be equal to the per
share price paid by the public for the Company's Common Stock in the IPO, less
any underwriter discounts and commissions.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Investor that:
-------------------------
/1/ The 3,000,000 shares have been calculated assuming the Company effects a
---
three-for-one split of its outstanding Common Stock prior to the Closing. In
the event that the Company does not effect this three-for-one stock split, the
number of shares to be purchased shall be adjusted accordingly.
<PAGE>
2.1 Organization and Good Standing. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
California and has all requisite corporate power and authority to carry on its
business as now conducted.
2.2 Authorization. All corporate action on the part of the Company,
-------------
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder, and the authorization, issuance and delivery of the Stock
has been taken or will be taken prior to the Closing, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and by
general principles of equity.
2.3 Valid Issuance of Stock. The Stock, when issued, sold and
-----------------------
delivered in accordance with the terms hereof for the consideration expressed,
will be duly and validly issued, fully paid and nonassessable and, based in part
upon the representations of the Investor in this Agreement, will be issued in
compliance with all applicable federal and state securities laws.
2.4 Litigation. Except as set forth in the Company's registration
----------
statement prepared in connection with the IPO, as filed with the Securities and
Exchange Commission ("SEC") and amended from time to time (the "Registration
--- ------------
Statement"), there are no actions, proceedings or investigations pending or, to
---------
the best of Company's knowledge, any basis therefor or threat thereof, against
or affecting the Company, that, either in any case or in the aggregate, would
result in any material adverse change in the business, financial condition, or
results of operations of the Company.
2.5 Properties. To the best of the Company's knowledge (but without
----------
having conducted any special investigation), the Company has (i) good and
marketable title to its properties and assets and has good title to all its
leasehold interests, and (ii) sufficient title, license and/or ownership of all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for its business as now
conducted on the date hereof.
2.6 Compliance with Other Documents. The execution and delivery of
-------------------------------
this Agreement, consummation of the transactions contemplated hereby, and
compliance with the terms and provisions hereof will not conflict with or result
in a breach of the terms and conditions of, or constitute a default under the
Restated Certificate or Bylaws of the Company or of any contract or agreement to
which the Company is now a party, except where such conflict, breach or default
of any such contract or agreement, either individually or in the aggregate,
would not have a material adverse effect on the Company's business, financial
condition or results of operations.
3. Representations and Warranties of the Investor. The Investor hereby
----------------------------------------------
represents and warrants that:
3.1 Authorization. This Agreement constitutes the valid and legally
-------------
binding obligation of the Investor, enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and by general principles of equity.
2
<PAGE>
3.2 Investigation. The Investor acknowledges that it has had an
-------------
opportunity to discuss the business, affairs and current prospects of the
Company with the Company's president. The Investor further acknowledges having
had access to information about the Company that it has requested or considers
necessary for purposes of purchasing the Stock.
3.3 Accredited Investor. The Investor is an "accredited investor" as
-------------------
such term is defined in Regulation D adopted by the SEC.
3.4 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Stock will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same.
4. Conditions to the Investor's Obligation at Closing. The obligation of
--------------------------------------------------
the Investor to purchase the Stock at the Closing is subject to the fulfillment
to the Investor's satisfaction on or prior to the Closing of the following
conditions:
4.1 Representations and Warranties. The representations and
------------------------------
warranties made by the Company in Section 2 hereof shall be true and correct
when made, and shall be true and correct as of the Closing with the same force
and effect as if they had been made on and as of such date, subject to changes
contemplated by this Agreement.
4.2 Securities Laws. The offer and sale of the Stock to the Investor
---------------
pursuant to this Agreement shall be exempt from the registration requirements of
the Securities Act and qualification requirements of all applicable state
securities laws.
4.3 Authorizations. All authorizations, approvals or permits, if any,
--------------
of any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Stock pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing.
4.4 Initial Public Offering of Common Stock. The initial public
---------------------------------------
offering of the Company's Common Stock shall have occurred.
5. Conditions to the Company's Obligations at Closing. The obligation of
--------------------------------------------------
the Company to sell the Stock at the Closing is subject to the fulfillment to
the Company's satisfaction on or prior to the Closing of the following
conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investor contained in Section 3 hereof shall be true as of the
Closing with the same force and effect as if they had been made on and as of
such date, subject to changes contemplated by this Agreement.
5.2 Securities Laws. The offer and sale of the Stock to the Investor
---------------
pursuant to this Agreement shall be exempt from the registration requirements of
the Securities Act qualification requirements of all applicable state securities
laws.
3
<PAGE>
5.3 Authorizations. All authorizations, approvals or permits, if any,
--------------
of any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Stock pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing.
5.4 Initial Public Offering of Common Stock. The initial public
---------------------------------------
offering of the Company's Common Stock shall have occurred.
5.5 Payment of Purchase Price. The Investor shall have delivered to
-------------------------
the Company the purchase price for the Stock as set forth in Section 1.2 hereof.
6. Covenants of the Company and the Investor.
-----------------------------------------
6.1 Agreement Not to Transfer.
-------------------------
(a) Prior to the first anniversary of the Closing, the Investor
shall not, directly or indirectly, Transfer or offer to Transfer any shares of
the Stock other than to affiliates who agree to be bound by the terms of this
Agreement, unless the Company consents to such Transfer and the transferee
agrees to be bound by this Agreement.
(b) In order to enforce the Transfer Restrictions, the Company
may impose stop-transfer instructions with respect to the Stock until the end of
the restricted period.
(c) As used in this Agreement, the term "Transfer" shall mean
any sale, transfer, assignment, hypothecation, encumbrance or other disposition,
whether voluntary or involuntary, of shares of the Stock. In the case of a
hypothecation, the Transfer shall be deemed to occur both at the time of the
initial pledge and at any pledgee's sale or a sale by any secured creditor or a
retention by the secured creditor of the pledged shares of the Stock in complete
or partial satisfaction of the indebtedness for which the shares of the Stock
are security.
6.2 Market Stand-Off. In addition to the Transfer Restrictions (which
----------------
shall in no way be limited by the following), in connection with any
underwritten public offering by the Company of its equity securities pursuant to
an effective registration statement filed under the Securities Act, the Investor
shall not Transfer or offer to Transfer any shares of the Stock without the
prior written consent of the Company and its underwriters. Such restriction (the
"Market Stand-Off") shall be in effect for such period of time from and after
----------------
the effective date of the final prospectus for the offering as may be requested
by the Company or such underwriters; provided, however, that (i) such Market
-------- -------
Stand-Off shall not exceed one hundred eighty (180) days, and (ii) the Investor
shall be subject to the Market Stand-Off only if the officers, directors and
other stockholders of the Company are also subject to similar restrictions. In
order to enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Stock until the end of the applicable stand-off
period.
6.3 Notice of Intention to Transfer. In the event the Investor plans
-------------------------------
to Transfer shares of the Stock in one or more transactions, the Investor shall
inform the Company of such intention to Transfer such shares fifteen (15) days
prior to such Transfer. Investor shall agree that any transfer, sale or other
disposition of the Company's Common Stock shall be
4
<PAGE>
through an orderly disposition, including, at the request of the Company,
through a broker-dealer recommended by the Company.
6.4 Voting Agreements. The following provision will be applicable at
-----------------
any time the Investor owns or controls in excess of 9.5% of the Voting
Securities (as defined below): In the event that the Board of Directors of the
Company approves a sale of substantially all of the assets or capital stock of
the Company or a merger in which the Company would not be the surviving
corporation, the Investor agrees to vote all shares of Voting Securities owned
by it with respect to such sale of substantially all of the assets or capital
stock or merger in the same proportion as the votes cast by all other
shareholders of the Company entitled to vote on such matter (other than the
Investor) at such time as such matter is presented for a vote of the
shareholders of the Company. The Investor, as a holder of Voting Securities,
shall be present, in person or by proxy, at all meetings of shareholders of the
Company so that all shares of Voting Securities beneficially owned by it may be
counted for the purpose of determining the presence of a quorum at such
meetings. For purposes of this Agreement, (i) the term "Voting Securities" shall
refer to all securities of the Company entitled to vote generally for the
election of directors, and (ii) the term "beneficial ownership" shall have the
meaning set forth in Rule 13d-3 under the Exchange Act.
6.5 Registration of Stock. The Company agrees that, upon request by
---------------------
the Investor, it will effect registration of the Stock in accordance with the
provisions contained in Exhibit A attached hereto. The Investor understands and
---------
agrees that (i) the Stock will be characterized as "restricted securities" under
the federal securities laws inasmuch as it is being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances, and (ii) each
certificate representing the Stock and any other securities issued in respect of
the Stock upon any stock split, stock dividend, recapitalization, merger or
similar event (unless no longer required in the opinion of counsel for the
Company) shall be stamped or otherwise imprinted with appropriate legends
mandated by federal and state securities laws.
7. Miscellaneous.
-------------
7.1 Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California, without
regard to the conflict of law provisions thereof.
7.2 Survival; Additional Securities. The representations and
-------------------------------
warranties set forth in Sections 2 and 3 shall survive until the Closing. The
covenants and agreements set forth in Section 6 shall survive in accordance with
their terms. Any new, substituted or additional securities which are by reason
of any stock split, stock dividend, recapitalization or reorganization
distributed with respect to the Stock ("Stock Distributions") shall be
-------------------
immediately subject to the covenants and agreements set forth in Section 6 to
the same extent the Stock is at such time covered by such provisions.
5
<PAGE>
7.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties hereto. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. Notwithstanding anything to the
contrary contained herein, the covenants set forth in Section 6 shall not be
binding upon any entity (other than an affiliate of the Investor) which acquires
any shares of the Stock or a Stock Distribution in a transaction permitted
hereunder.
7.4 Entire Agreement. This Agreement constitutes the entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof.
7.5 Notices. Except as otherwise provided, all notices and other
-------
communications required or permitted hereunder shall be in writing, shall be
effective when given, and shall in any event be deemed to be given upon receipt
or, if earlier, (i) five (5) days after deposit with the U.S. postal service or
other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1) business day
after the day of deposit with Federal Express or similar overnight courier,
freight prepaid, if delivered by overnight courier or (iv) one (1) business day
after the day of facsimile transmission, if delivered by facsimile transmission
with copy by first class mail, postage prepaid, and shall be addressed, (a) if
to the Investor, at the Investor's address set forth below its signature, or at
such other address as the Investor shall have furnished to the Company in
writing, or (b) if to the Company, at its address as set forth below its
signature, or at such other address as the Company shall have furnished to the
Investor in writing.
7.6 Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of the Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Investor.
7.7 Legal Fees. In the event of any action at law, suit in equity or
----------
arbitration proceeding in relation to this Agreement or the Stock or any Stock
Distribution, the prevailing party shall be paid by the other party a reasonable
sum for the attorneys' fees and expenses incurred by such prevailing party.
7.8 Expenses. Irrespective of whether the Closing is effected, the
--------
Company and the Investor shall each pay their own costs and expenses incurred
with respect to the negotiation, execution, delivery and performance of this
Agreement.
7.9 Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.10 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be an original, but all of which together shall constitute
one instrument.
6
<PAGE>
7.11 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.12 Confidentiality. The parties hereto agree that, except with the
---------------
prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish, or make accessible to anyone any
confidential information, knowledge, or data concerning or relating to the
business or financial affairs of such other party to which said party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, or the performance of its obligations hereunder.
[Signature Page to Follow]
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
PORTAL SOFTWARE, INC.
20883 Stevens Creek Boulevard
Cupertino, CA 95014
Attn: John E. Little, President
and Chief Executive Officer
/s/ Jack Acosta
------------------------------
By:
CISCO SYSTEMS, INC.
170 W. Tasman Drive
San Jose, CA 95134
Attn: Dan Scheinman, Vice President, Legal and Government Affairs
/s/ John Chambers
------------------------------
By:
8
<PAGE>
EXHIBIT A
---------
1. Registration Rights. The Company covenants and agrees as follows:
-------------------
1.1 Definitions. For purposes of this Exhibit A, capitalized terms
----------- ---------
used herein and not otherwise defined shall have the meanings ascribed to them
in the Stock Purchase Agreement between the Company and the Investor to which
this Exhibit A is attached. In addition, the following terms used herein shall
---------
have the following meanings:
(a) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(b) The term "1934 Act" means the Securities Exchange Act of
1934, as amended.
(c) The term "register", "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
1.2 Request for Registration.
------------------------
(a) If the Company shall receive a written request from the
Investor which request may be received commencing ten months after the Closing
date, that the Company effect a registration on a Form S-3 and any related
qualification or compliance with respect to the Stock, then the Company shall
promptly commence preparation of such registration statement, and as
expeditiously as reasonably possible when the Company is eligible to use Form S-
3, effect the registration of all, but not less than all, such Stock on Form S-3
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all of the Stock. The Company
shall have no obligation to effect any registration of less than all of the
Stock.
(b) Notwithstanding anything to the contrary in this Section
1.2, the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.2: (i) if the Company
shall furnish to the Investor a certificate signed by the President of the
Company stating that, in the good faith judgment of the Board of Directors of
the Company, such registration should be deferred due to material events
directly relating to the Company, in which event the Company shall have the
right to defer the filing of the Form S-3 for a period of not more than 90 days
after receipt of the request of the Investor under this Section 1.2 (provided,
however, that the Company may defer such registration only once); or (ii) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance.
A-1
<PAGE>
(c) The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 1.2 after the
earlier to occur of the following events: (i) the Company has effected one
registration pursuant to this Section 1.2, and such registration has been
declared or ordered effective and otherwise satisfies and continues to satisfy
the terms and conditions of this Section 1.2; (ii) the Company has voluntarily
effected the registration of all of the Stock without having first received a
request for such registration pursuant to this Section 1.2 (a "Voluntary
---------
Registration"), and such Voluntary Registration has been declared or ordered
------------
effective and otherwise satisfies and continues to satisfy the terms and
conditions of this Section 1.2; or (iii) if Form S-3 is not available for such
offering by the Investor.
1.3 Obligations of the Company. Whenever required under Section 1.2
--------------------------
to effect the registration on Form S-3 of the Stock, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a Form S-3 with respect to
such Stock and use its best efforts to cause such registration statement to
become effective as soon as reasonably practicable after the mailing of the
request for such registration but in no event later than ninety (90) days after
such mailing. The Company shall keep such registration statement effective until
the earlier of (i) two (2) years after the Closing, (ii) the distribution of all
of the Stock as contemplated in the registration statement has been completed,
and (iii) the date which all shares of the Stock held by the Investor may
immediately be sold under Rule 144 during any 90-day period.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Investor such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Investor may reasonably
request in order to facilitate the disposition of the Stock.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Investor;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Notify the Investor covered by such registration statement
at any time when a prospectus relating thereto is required to be delivered under
the Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
A-2
<PAGE>
(f) Cause all such Stock registered pursuant hereunder to be
listed on each securities exchange on which similar securities issued by the
Company are then listed.
(g) Provide a transfer agent and registrar for all of the Stock
registered pursuant hereunder and a CUSIP number for all such Stock, in each
case not later than the effective date of such registration.
1.4 Investor Obligation to Furnish Information. It shall be a
------------------------------------------
condition precedent to the obligations of the Company to take any action
pursuant hereto with respect to the Stock that the Investor shall furnish to the
Company such information regarding itself, the Stock, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Stock.
1.5 Expenses of Registration. All expenses incurred in connection
------------------------
with registrations, filings or qualifications pursuant hereto, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company
(including fees and disbursements of counsel for the Company in its capacity as
counsel to the Investor hereunder but excluding the fees and disbursements of
any other counsel for the Investor) shall be borne by the Company; provided,
however, that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant hereto if the registration request is
subsequently withdrawn at the request of the Investor, unless the Investor
agrees to forfeit its right to any demand registration pursuant hereto; provided
further, however, that if at the time of such withdrawal, the Investor has
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Investor at the time of its request and has
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Investor shall not be required
to pay any of such expenses and shall retain its right of registration pursuant
to Section 1.2.
1.6 Indemnification. In the event any Stock is included in a
---------------
registration statement under Section 1.2:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Investor, any underwriter (as defined in the Act) for the
Investor and each person, if any, who controls the Investor or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
---------
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to the Investor, or such underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or
A-3
<PAGE>
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection (a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, and any controlling
person of any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Investor expressly for use
in connection with such registration; and each such Investor will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection (b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection (b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Investor, which consent shall not be unreasonably withheld; provided, that, in
no event shall any indemnity under this subsection (b) exceed the gross proceeds
from the offering received by the Investor.
(c) Promptly after receipt by an indemnified party under this
Section 1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.6, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.6.
A-4
<PAGE>
(d) If the indemnification provided for in this Section 1.6 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and the Investor under this
Section 1.6 shall survive the completion of any offering of the Stock in a
registration statement pursuant hereto, and otherwise.
1.7 Termination. The Company's obligation to register the Stock
-----------
pursuant to this agreement shall terminate on the earlier of (i) the second
anniversary of the Closing and (ii) the date on which all shares of the Stock
held by the Investor may immediately be sold under Rule 144 during any 90-day
period.
A-5